Mortgage rates have nearly hit 7% as home sellers are discouraged to sell due to the rapid cool down of the current housing economy. This discouragement has driven the demand for homebuying down. The rate of a 30-year fixed mortgage has risen to 6.7%, this rate making affordability of homebuying the worst it has been in almost 37 years. With the low supply and the affordability of homebuying making it hard on the market, this is making would be buyers become renters, but renters are finding a comfort zone as the average rent price is around $2,039, about an 11% increase from last year.
And with all of this going on, pending home sales have decrease for the third time in a row, this time more than expected as it dropped 2% last month. Compared to the years prior's numbers, pending sales went down by 24.2%. And with the supply of houses still being low, this has also slowed the price growth of homes. First American Deputy Chief Economist Odeta Kushi predicts that the house preceding market will experience a slow down of prices to "a more reasonable pace".
I find this interesting because as the article will show, the mortgage rates that we are experiencing are almost as bad as the issue we faced in the 2008 Financial Crisis. The article cites that the rates that we are experiencing now is a 15 year high and it has been a very quick growth at that. One of the graphs from the article shows the slow build up in 2008 with mortgage rates, while if you look at the current rate and the build up to it, it was quite fast and large in how much it increased by. This is definitely something to keep an eye on as the year comes to a close here soon.
https://finance.yahoo.com/news/housing-sellers-mortgage-rates-climb-173946424.html
I agree that this is something to keep an eye on as we try avoid a recession. Especially since I myself will be looking for a home soon enough. Let's hope that the housing market starts trending in a different direction soon.
ReplyDeleteAs rates are pushed higher, the housing market continues to be cooling down, In August, housing sales fell for the seventh straight month to the lowest level since early pandemic lockdowns. Hopefully, the markets will improve early next year.
ReplyDeleteAn article I read talked about how the Fed is pushing interest rates up now, effectively keeping us in a recession to decrease inflation. This article makes the effects of what the Fed is trying to do fairly obvious.
ReplyDeleteThe housing market has taken a major hit in the recent months and it continues to look like it is going in the negative. The Fed increasing interest rates will only make matters worse. Housing sales will soon reach a record low and the Fed should consider taking a different approach as the year comes to an end.
ReplyDeleteIt's very concerning how so much of what is happening in the current economy mirrors patterns from the 2008 recession. As both interest rates and inflation rates rise, it puts a severe restriction on a consumer's ability to finance a home.
ReplyDelete